2009 (11) TMI 193 - AT - Service Tax

Penalty- before the issue of Show Cause Notice The assessee had not paid service tax for the services rendered under the category of Advertisement/broadcasting services internet services and multi-system operator service. The revenue demanded service tax interest and penalties. Appellant discharge the service tax liability before the issue of show cause notice. Adjudicating authority dropped the penalties. Commissioner revise the said order and imposed penalty u/s 76 and 78. Held that- since the assesese had already given reasonable cause for its failure in discharging the service tax liability the review adjudication order of the commissioner was unsustainable and liable to be set aside. The appeal is allowed.

Issues:
1. Imposition of penalty under sections 76 and 78 of the Finance Act, 1994.
2. Invocation of provisions of section 80 of the Act for waiver of penalty.
3. Adjudication of service tax liability and penalties.

Imposition of Penalty under Sections 76 and 78:
The case involved a dispute regarding the imposition of penalties under sections 76 and 78 of the Finance Act, 1994. The Commissioner, in the Review Adjudication Order, confirmed the demands made by the adjudicating authority and imposed penalties under sections 76 and 78. The appellant contested this decision, arguing that the provisions of section 80 of the Act could be invoked in the absence of fraud, collusion, or misrepresentation. The Tribunal analyzed the case law cited by the appellant and noted that the Commissioner had not proven any "reasonable cause" to invoke section 80 for waiver of penalties. The Tribunal found that the appellant's explanation for the delays in compliance did not meet the statutory requirements for invoking section 80. However, the Tribunal also observed that the extended proviso of section 73 had been invoked for recovering the service tax amount, leading to the imposition of penalties under sections 76 and 78. Ultimately, the Tribunal found in favor of the appellant, citing relevant case law and holding that the review adjudication order imposing penalties was unsustainable and set aside.

Invocation of Provisions of Section 80 for Waiver of Penalty:
The appellant argued that the provisions of section 80 of the Act could be invoked to waive penalties under sections 76 and 78. The Tribunal considered the submissions made by both sides and analyzed the reasons provided by the adjudicating authority for non-imposition of penalties. The Tribunal noted that the Commissioner had invoked the extended proviso of section 73 to recover the service tax amount, which led to the imposition of penalties under sections 76 and 78. However, the Tribunal found that the appellant's reasoning for invoking section 80 seemed acceptable, especially considering the settled case law in favor of the appellant. The Tribunal referenced a decision of the Hon'ble High Court of Punjab and Haryana, which emphasized that penalties should not be imposed if the assessee showed reasonable cause for any failure. Based on this analysis, the Tribunal concluded that the review adjudication order imposing penalties was unsustainable and set aside.

Adjudication of Service Tax Liability and Penalties:
The case involved a show-cause notice issued to the appellant for non-payment of service tax under various categories. The adjudicating authority confirmed the service tax amount and imposed penalties under section 77 of the Act. Subsequently, the Commissioner issued another show-cause notice for penalties under sections 76 and 78. The Tribunal reviewed the submissions and records, noting the disputes with Cable Operators regarding service tax liability. The Tribunal found that the reasons provided by the Commissioner for imposing penalties did not carry the case of the revenue further, especially considering the provisions of section 80 of the Act. Ultimately, the Tribunal set aside the impugned order and allowed the appeal with consequential relief, if any.

This detailed analysis of the judgment highlights the key issues of imposition of penalties under sections 76 and 78, invocation of section 80 for waiver of penalties, and the adjudication of service tax liability and penalties, providing a comprehensive understanding of the legal complexities involved in the case.

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